Since Spherical Roller Bearings (SRBs) have high load capacity and are self-aligning, they are seeing increasing use in the rotating machinery. Typical applications are paper machines, steel rolling, marine equipment, geared transmissions and modern high power wind turbines. Therefore, it is becoming increasingly important to study the dynamic behavior of SRBs and know the excitations caused by internal imperfections. Extensive research has been conducted to study the dynamics of ball bearings, while studies related to spherical roller bearings are short-shrifted. In this paper a three degree of freedom dynamic model of spherical roller bearing that takes into account the inner and outer race surface defects is introduced. In the model, bearing forces and deflections are calculated as a function of contact deformation and bearing geometry parameters according to nonlinear Hertzian contact theory; taking radial clearance into account. Two defect cases are simulated: an elliptical surface concavity on the inner race, and an elliptical surface concavity on the outer race. In case of elliptical surface concavity, it is assumed that the contact between the roller and inner and outer races is continuous as each bearing roller passes over the defect, and contact stiffness in the defect area varies as a function of the defect's contact geometry. The equations of motion were solved numerically. Simulation results demonstrate that the SRB model is sufficiently accurate for typical rotor bearing systems. Numerical results also show that each local defect excites vibration at a frequencies corresponding to the bearing defect frequencies, and thus, makes it possible to identify the location of the defect (i.e. inner or outer race) from the simulated frequency spectrum. Numerical simulation is carried out successfully for a full rotor-bearing system to demonstrate the application of developed SRB model in a real world analysis. Finally, simulation results are verified and compared to measured data obtained from an equivalent rotor bearing system with a predefined local defect. Comparison shows a good agreement between the simulated and measured results.